Chevrolet used to make a compact pickup known as the S-10. But that term has a whole new meaning in Saskatchewan.
The Saskatchewan Upstream Petroleum Industry Associated Gas Conservation Directive S-10 was brought into effect July 1, 2011. It provided a grace period for existing wells drilled prior to July 1, 2012. That grace period ended July 1, 2015. If you have a well producing more than 900 cubic metres of gas per day, it should have its gas collected instead of flared, incinerated or vented.
From talking to various players in the business, we found that new gas plants under construction or plants being expanded are economic, but the S-10 directive played a big part.
The dollar figured involved is nothing to laugh at. At least a quarter billion dollars have been spent or will be spent on gas infrastructure in the southeast alone once all is said and done.
Saskatchewan, a net importer of natural gas for several years, has seen it gas production decline substantially from a high of approximately 330 billion cubic feet per year to just under 200 billion.
More tellingly, although we ran a headline a few months ago proclaiming 鈥淪askatchewan鈥檚 natural gas drilling is all but dead,鈥� We鈥檝e turned a corner now with production, if not drilling, and gas production has risen to about 210 billion cubic feet per year. That additional gas is not from new drilling, but collecting more associated gas. Saskatchewan now produced more associated gas, that is, gas that is produced alongside oil, that it does from straight gas production, sometimes called 鈥渘on-associated gas.鈥�
You鈥檙e seeing a lot less flaring in southeast Saskatchewan now, especially compared to seven years ago. You鈥檙e also noticing a lot less sour gas odours wafting into your truck as you drive down the highway.
Collecting more associated gas has other benefits. Taken directly from the S-10 document: 鈥淔laring and venting of associated gas is known to emit air pollutants which may contribute to acid rain, smog and respiratory problems. Also, these emissions can be sources of harmful chemical contaminants such as volatile organic compounds, inhalable particulate matters and monocyclic and polycyclic aromatic hydrocarbons. These air pollutants, with the exception of carbon dioxide, can contribute to the degradation of regional air quality, acidify surface water and soil as well as potentially impact human health. By reducing flaring and venting of associated gas the public鈥檚 health and quality of living is enhanced through improvements in air quality, protection of water resources and topsoil resources.鈥�
Some people might think it means a lot more royalties to the provincial government. They would be wrong. The government likely collected more revenue from the sales tax, business income tax and personal income tax on workers from the construction of the new gas facilities than it will ever see in royalties. The 2015 provincial budget projected a paltry $19.1 million in royalties from all natural gas sources. This is a reflection on the low price of gas and lower production compared to several years ago.
One thing we did hear from almost every player is the need for more infrastructure, in particular, pipelines. This especially true for gas collection. Without more pipe in the ground, S-10 cannot be fully implemented, we were told.
Most people may not have heard of it, but S-10 has had a substantial impact, and will have for years to come. 聽
